UnionBank bond offer 3x oversubscribed

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines has raised P9 billion from its dual tranche offering of fixed-rate bonds to augment its funding base and finance expansion plans.

In a disclosure to the Philippine Stock Exchange, UnionBank said it sold P8.115 billion worth of three-year bonds at an interest rate of 2.75 percent and P885 million worth of 5.25-year debt papers at 3.375 percent.

The total amount raised was three times larger than the original issue size of P3 billion after investors gobbled up the bonds.

This is UnionBank’s third issuance from its P39-billion bond program, following the issuance of P11-billion two-year fixed rate bonds in December 2018 and another P5.8 billion from three-year peso-denominated bonds in June 2019.

“The third drawdown from the bank’s program is part of our ongoing efforts to extend term liabilities, expand funding base and also support business expansion plans,” UnionBank treasurer and chief financial officer Jose Emmanuel Hilado said.

The bonds will be issued and listed on the Philippine Dealing and Exchange Corp. on Dec. 9.

According to UnionBank, the issuance marks the first dual-tranche offering issued under BSP Circular 1010 on bank-issued bonds. UnionBank’s 5.25-year tranche is also the longest tenor bank-issued bond to date.

Hong Kong and Shanghai Banking Corp. Ltd. and Standard Chartered Bank served as the joint lead arrangers and bookrunners for the transaction. They are also the selling agents for the offering together with UnionBank.

From January to September, earnings of UnionBank remained steady at P8.48 billion compared to P8.51 billion in the same period last year despite the surge in provision for bad loans due to the health crisis.

The bank allocated P7.46 billion for impairment losses during the nine-month period, 15.4 times the P484 million set aside in the same period last year in anticipation of higher defaults due to the COVID-19 pandemic.